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Apple CFO Maestri says US border tax would be bad for economy
[SAN FRANCISCO] Apple Inc Chief Financial Officer Luca Maestri said a US border tax would harm the world's largest economy by raising costs for consumers and making it harder for companies to compete overseas.
A border tax also would increase the value of the US dollar, which is already too strong, and reduce the competitiveness of the country's economy, the CFO said Tuesday at a technology conference in San Francisco sponsored by Goldman Sachs Group Inc.
President Donald Trump and a Republican-controlled Congress want to rewrite US taxes in ways that may help and hurt Apple, the world's most valuable public company.
One proposal would cut the corporate tax rate to 20 per cent and tax US companies on their domestic income and imports, while exempting their exports and offshore income.
Companies that import a lot, such as retailers, oppose the idea, while exporters have expressed support. Apple buys most of the components for iPhones, iPads and Mac computers from outside the US and most of its devices are assembled overseas.
Mr Trump's tax talk, and his efforts to increase domestic manufacturing, have raised speculation that Apple may try to make more of its products in the US and get more components domestically.
Mr Maestri, asked about Apple's manufacturing process, said the company has contributed greatly to the US economy in the past decade and suggested the global technology supply chain is too big for even Apple to change.
"The supply chain for the technology industry is not in the US," he said.
Still, Mr Maestri was hopeful for other US tax changes. He said there's broad support for lowering corporate tax rates in the country and encouraging companies to bring overseas earnings back to the US.
Under another Trump proposal, companies could pay a one-time 10 per cent levy to bring back money held overseas, less than a third of the current rate.
"There is a good chance something is going to happen this year," the CFO said.
Apple had more than US$230 billion of overseas cash and marketable securities at the end of 2016. Until reform happens, the company will continue with a big capital return program, but if the tax repatriation rate is lowered, it will have more flexibility and could return more cash to shareholders, he said.